Tim Draper says Silicon Valley needs a government that is more tech savvy

A prominent venture capitalist proposed on Monday a plan to split California into six new states, including one called "Silicon Valley" that would stretch from San Francisco to San Jose and include the entire region where many of the biggest tech companies have their headquarters.

The plan by Tim Draper, who was an early backer of Skype, Baidu and Hotmail, faces multiple hurdles and would require significant support from among the state's 38 million [m] residents, and from the rest of the country if it makes it any further. He hopes to put the idea plan on the November 2014 ballot, which would require about half a million signatures. On the face of it, the chances of it being realized are low.

Tim Draper presents his plan to break California into six states at a Silicon Valley news conference on December 23, 2013.

But Draper said splitting California would bring real benefits.

"Something's not working in our state, and I'm convinced that it is with the existing system, the existing breadth of industry and varying interests. California is untenable and un-governable," Draper told a sparsely attended news conference at the Silicon Valley school for entrepreneurship that he created and that bears his name. There were about 20 people in the room, although only six appeared to be reporters.

"I'm convinced that the best path for Californians is to create six new states that are unencumbered by trying to balance the interests of people who have very divergent goals and aspirations," he said.

Draper said he believes the interests of the tech industry in Silicon Valley, the defense and entertainment industries in and around Los Angeles, the farms of the state's Central Valley, and a growing medical devices business in the south of the state are best served by local governments.

For Silicon Valley, he said tech companies would benefit from a state government that was more "tech savvy."

When pressed on that assertion, Draper offered regulations covering the tech industry as an example.

"Whenever I try to talk to people in [California state capital] Sacramento, they are not really in touch with what we are trying to accomplish in Silicon Valley," he said. "Here we are working on new communications systems that are always several leaps in front of the bureaucracy. So the bureaucracies are all trying to catch up, and we're not quite sure how we should be governed."

His proposal comes at a time of growing discontent in San Francisco and Silicon Valley at the apparent impact of the tech industry. The massive amount of wealth created by companies such as Google, Facebook and Twitter has amplified economic disparities in the area and made the local housing market one of the most expensive in the country.

While the root causes of the social friction in the area are complex, the initiative by the billionaire Draper is already being compared to similar proposals from other local tech elites.

Google founder Larry Page said in May that he thinks there should be a place with looser laws that allow tech companies to experiment. Venture capitalist Peter Thiel has put money behind a plan to build a floating island off the California coast in international waters -- away from U.S. regulations and immigration laws. And Stanford University lecturer Balaji Srinivasan, also a venture capitalist, has theorized an "exit" from the U.S. in which Silicon Valley would become "an opt-in society, ultimately outside the United States, run by technology."

Under Draper's proposal, the six new states would be called Jefferson, Silicon Valley, North California, Central California, West California and South California.

The proposal includes a provision that centers on one of Silicon Valley's basic tenants: Competition is good.

The breakup of the state wouldn't happen until at least 2018 and would require an act of Congress. Before that time, residents of each county could vote to redraw the proposed boundaries so their county could join a different state from the one Draper is prescribing, "thereby creating competition in proposed governance which will lead to better and more responsive governance."

While Draper's chances of realizing his vision might be slim, the plan will almost certainly serve to continue the debate about the power of the technology industry and how it interacts and is regulated by government.

Draper is probably hoping for support from the tech community for his plan. He first disclosed it to TechCrunch, a website that tracks Silicon Valley startups, and Monday's news conference wasn't in one of the state's major cities but in San Mateo, close to the heart of Silicon Valley.